Good post, Ian. Derivatives stacked upon derivatives with no fundamental, structural foundation. It was just a matter of time. There seems to be no consideration of dynamic risk.

do it first.

When the market value of an asset represents most of its worth, then the only way to make money on the market is to do what everyone else does, but do it first.

If she had said this two years ago, well, odds are she would have been told not to by her employers, and if she had insisted, been fired.

When I was a young man, this kind of thing was called "fraud," and when it involved the collusion of corporate execs, rating agencies, analysts, and media, it was called "conspiracy to defraud." Now it is business as usual.

Yes she would have been fired and it is a little late but it did give it the added push into main stream media were has been nothing but Happy Hour. There are those like yourself, rge, cr and others that have been on this subject for some time. I love the part Paulson plays in all of this, now he has to see if can fix the problem that he was part of until the election.
jo6pac

that you're saying there is one. I don't see one yet, except possibly in the dollar, and in subprime. We're having a nice rally today. I've called for a pullback and it has not come.

Saying that there is one does not make my forecast true.

http://mauberly.blogspot.com/

How much of today's rally was the herd running from that mess?

How much of this money helps the average person?
NONE!
Is there something that will help the average person?
NO!
This is about the rich and everyone else.
The average person will suffer.
The rich won't care.
The poor will revolt.
Sooner or later, it will happen.

_{repressive governments mix administrative clumsiness & inefficiency with authoritarian tendencies.}

If the stock market goes to 15,000 and the dollar loses 30% of its value, you may think you have more money but you don't.

It's equivalent to almost a three thousand point drop in the market.

Yesterday the dollar lost a penny and a half to the Euro, which is also losing value. So that rally was really a loss of about a hundred points.

I did inhale.

A financial crisis that began in the US is coming to a home near you

As American banks admit the billion-dollar scale of their losses, Bank of England Governor warns that the worst is still to come in Britain

By Sean O'Grady, Economics Editor
Published: 07 November 2007

No one knows where the bodies are buried. Indeed, no one is quite sure exactly how many bodies there are. But they are out there, and there are plenty of them: underperforming loans, worthless securities and overvalued assets, all safely buried well away from the banks' balance sheets. Buried – but not quite dead.

Increasingly they are surfacing, and these financial zombies are every bit as frightening as any you'll encounter in a horror flick. No less terrifying are the other ghouls haunting the global economy: oil at $97 (£46)a barrel; the price of commodities from copper to wheat at historic highs and a White House seemingly intent on scaring everyone witless with the prospect of a fresh conflagration in the Middle East.

The Governor of the Bank of England has been spooked already, telling us yesterday that: "I think most people expect that we have several more months to get through before the banks reveal all the losses that have occurred... There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities". The "fragilities" have been exposed in some of the world's biggest banks. Their bosses have been the biggest casualties, comforted only by compensation packages running into hundreds of millions of dollars – remarkable even by the standards of Wall Street.

Still, such numbers are trivial compared to the losses banks are beginning to reveal, mainly down to their enthusiasm to lend to the "sub-prime" market – people who should never have been granted mortgages in the first place. Now these unfortunates are seeing their low rates of interest run out, they are having to refix at far higher rates and are defaulting and pushing the American real estate market into a slump. Packaging up these loans and selling them on seemed a good idea at the time – it spread the risk and offered investors "superior returns". Not any more, though: at a guess, some $15bn of losses at Citigroup, even though the bank pitifully admits it isn't quite sure if that's the lot; perhaps $8bn at Merrill Lynch; thus far $4bn at UBS. There will be more. Much more. Despite assurances from the Chancellor about the strength of our institutions, the hunt is on for the next victim. Barclays? Alliance & Leicester? Royal Bank of Scotland? They could suffer from buying too many of these defaulting loans. Or, like the case of Northern Rock, they may be hit by the credit squeeze, as banks hoard cash to deal with any nasties that emerge. In these circumstances they won't lend to each other, are less willing to lend to the "sub-prime" market and mainstream borrowers – businesses and families – may also find it harder to arrange that overdraft or car loan.

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